5 Crucial steps for setting up your Shopify bookkeeping with QuickBooks Online

Where are you along the path to running a successful Shopify store? Maybe you’ve set up your Shopify e-commerce site and things are starting to really take off. In fact, maybe business is booming - congratulations! Now it’s time to handle the business side of things to keep going strong. If you're a Shopify seller using QuickBooks Online, it's crucial to set up your Shopify bookkeeping the right way. Shopify bookkeeping is more complex than most so some customized setup is needed to make it work efficiently. We’ve worked with numerous Shopify sellers to help them set up, organize, and streamline their bookkeeping, and are here to offer some guidance that could save you tons of time and frustration. Keep reading or click the video linked below and we'll share 5 crucial tips for setting up your Shopify bookkeeping with QuickBooks Online.

Step #1 - Setting up QuickBooks Online

We'll start with setting up QuickBooks Online since that’s the first thing that you need to do. We recommend purchasing the Essentials version of QuickBooks Online and not the Plus version. Even though the Plus version says that it will handle inventory, that is inventory for other types of businesses and not for e-commerce. So start with the Essentials version and you'll save some money.

Step #2 - Setting up the chart of accounts

Next, let's take a look at some of the accounts that you need to make sure are set up in your QuickBooks Online chart of accounts. To view and make changes to the chart of accounts in QuickBooks Online, you'll go to “Accounting” and then “Chart of Accounts”. In the chart of accounts, you’ll want to start off by taking a look at Shopify income. You’ll need to make sure that all of the different components of Shopify income are set up, such as discounts, returns, sales, and shipping income. If you’re using PayPal, you’ll also need to make sure that you have set up your PayPal bank account in QuickBooks. If you're paying vendors for inventory in advance, then make sure that you set up an advanced vendor payments account. You’ll want to make sure that you have set up an inventory asset account. Then you'll also need to make sure that you set up clearing accounts for all of your payment processors. In the example from my video, we have Affirm Clearing, Manual Clearing, Shopify Clearing, Shopify Payments Clearing, and and Shopify PayPal Clearing. If you’d like to watch this part of my video for reference, click this link.

Step #3 - Connecting QuickBooks Online to bank accounts

The next step is to connect your QuickBooks Online to your business bank and credit card accounts. This is where we can start taking advantage of some automation. QuickBooks Online will pull all of your business bank and credit card transactions into QuickBooks where you'll be able to go in and categorize those transactions without having to do a whole lot of data entry.

Step #4 - Shopify and QuickBooks Online integration

The fourth step, and probably the most crucial step is your Shopify to QuickBooks Online integration. When connecting Shopify to QuickBooks Online, the main thing you need to keep in mind is that there are many different apps, but most apps are bringing over detailed transactions into your QuickBooks. Because Shopify uses multiple payment processors, it's almost impossible to reconcile all of the individual sales receipts that are going into your QuickBooks to net deposits from different payment processors. The best thing to do is to use an app that summarizes your Shopify transactions and only brings summary transactions into your QuickBooks. Our favorite app is A2X. When you use A2X, it'll record daily summarize transactions into QuickBooks by the different payment processors that you use, making it much easier to reconcile the net deposits that you're receiving from your payment processors.

Step #5 - Account mapping

The last step for setting up your Shopify bookkeeping in QuickBooks Online is to work on the account mapping between your integrator app and QuickBooks Online. As I mentioned, we prefer to use A2X because it brings over summarized transactions into QuickBooks. You’ll have to go into A2X, into the account mapping settings, and map the different types of types of transactions in Shopify so that they'll go into the correct account categories in QuickBooks. For example, you will need to map any sales, returns, refunds, sales taxes, payment gateways, Shopify fees, and a lot more.

Closing and Resources

Now you know the 5 crucial steps for setting up your Shopify bookkeeping with QuickBooks Online. If you'd like to know even more about setting up your Shopify bookkeeping in QuickBooks Online, click here to sign up for my free Shopify Bookkeeping Blueprint. In this free blueprint, you’ll find out all of the accounts and the account categories that you need to set up in QuickBooks Online so that you can have a solid foundation when setting up your books. If you would like some help setting up your Shopify bookkeeping with QuickBooks Online, and are ready to work with a trusted and reliable Shopify bookkeeping team, you can use this link to learn more about Mavency to see if we are a good fit for working together. If you would like to try out A2X, our preferred Shopify to QBO integration app, use Mavency’s discount code when signing up with this link to get 20% off your first 6 months: A2XMAVENCY. Before you go, we’d also like to share some more free resources with you. If you want to continue learning more about Shopify bookkeeping, we encourage you to explore our Mavency YouTube channel where we continue to add new content for e-commerce sellers. For additional support, come join my Facebook community where you can connect with other Shopify sellers and professional bookkeepers online. We hope to see you there!